Hefty Health Spending in Stimulus Bill
Law Signed by President Obama Includes Funds for Medicare, Research, and Insurance
Feb. 17, 2009 -- The economic stimulus bill signed by President Obama
contains more than $140 billion in health care spending, designed mostly to
ease the recession's effects on workers and also to boost long-held goals of
improving the nation's health information infrastructure.
Most of the money is targeted to programs providing health coverage to
low-income families or that help workers keep private coverage if they lose
their jobs. But the new law also provides billions of dollars for medical
research and incentives for doctors and hospitals to buy and use electronic
medical records systems.
It also, for the first time, directly commits federal dollars to studies
comparing medical treatments head-to-head in the hopes of finding out which
ones work best or are the most cost-effective.
The key health care provisions of the American Recovery and Reinvestment Act
of 2009 include:
More than 50 million Americans get medical care through Medicaid, but state
governments say they may be forced to cut back on coverage to make up budget
shortfalls. The bill increases federal payments by $87 billion to prevent those
cuts, and also penalizes states if they do cut benefits while the extra money
A federal law called COBRA guarantees workers can keep their private health
insurance if they lose their jobs. But those workers have to pay the full
premiums themselves. The bill spends $25 billion to cover 65% of the premium
costs for lower-income workers.
"It will not achieve any structural reform in the system but it will
help a lot of people in the near term," says Len Nichols, who directs the
health policy program at the New American Foundation.
Doctors, hospitals, and health insurers have been slow to acquire electronic
prescribing and computerized medical records systems. The systems are expensive
and many medical practices fear that any system they buy won't be able to
communicate with other systems on the market, says Henry Aaron, a senior fellow
at the Brookings Institution.
The recovery bill commits $19 billion in grants and incentives for companies
and practices to buy health information technology. Aaron says the money isn't
a short-term economic stimulus, but instead a "down payment" on an
effort to improve efficiency and quality in the health system.
"They do hold out the promise of producing very real long-term benefits
-- and I emphasize long-term benefits -- in the health care system," he
The bill includes $10 billion to increase the research budget of the
National Institutes of Health (NIH).The Senate originally boosted that spending
by $6.5 billion, but the figure was moved higher in negotiations with the
House. That's on top of the agency's $29 billion budget, which remained flat
Medical and research groups praised the extra funding. "This bill will
reverse years of flat research funding, create economic growth, and allow
doctors and researchers to accelerate progress against cancer and other
diseases," Richard L. Schilsky, MD, president of the American Society of
Clinical Oncologists, says in a statement.